2012 NEW IRS Voluntary Disclosure Program for Offshore and Foreign Bank Account Holders.
Internal Revenue Service IRS introduced new 2012 offshore voluntary disclosure program to encourage IRS taxpayers holding foreign or offshore bank accounts. Previous programs introduced in 2009 and 2011 have been extremely successful for the IRS. Based on the result of the Offshore Voluntary Disclosure Program (OVDP), IRS understands that it is cost effective and time wise to obtain tax compliance through "carrot and stick" framework than "stick" alone.
Althoug past criminal tax investigations focused on the offshore banking problems in Switzerland, future IRS criminal tax investigations will focus on the Asia Pacific regions including China, South Korea, Taiwan, Australia, Japan, Indonesia and Malaysia.
FEATURES OF THE 2012 OFFSHORE VOLUNTARY DISCLOSURE PROGRAM FOR OFFSHORE BANK ACCOUNTS
1) 2012 Offshore Bank Voluntary Disclosure will be open for an indefinite period:
Although IRS did not set a deadline for their Voluntary Disclosure program, a key component of any voluntary disclosure program requires that you disclose to the IRS before they find you. In addition, the terms of the voluntary disclosure program could change at any time and the likelihood of increased IRS tax penalties in the future.
2) 27.5% vs. 25% Tax Penalty:
IRS Tax Penalty under the 2012 Offshore Bank program requires taxpayers to pay a tax penalty of 27.5 versus 25% under the 2011 OVDP based on the highest total balance in offshore bank or foreign bank bank accounts.
3) 5% vs. 12.5% Tax Penalty:
Some taxpayers will be eligible for 5 or 12.5 percent penalties based on the level of the asset value and their culpability in establishing the offshore bank or foreign bank scheme. An example of a taxpayer who may qualify for the lower category of tax penalties would be a recent immigrant who came to the United States and kept a bank account in his or her home country and recently discovered the Foreign Bank Account Reporting Requirement.
4) 2012 Offshore Bank Account Participants Must File IRS Tax Returns:
5) Dual Citizens - New Voluntary Disclosure Program for Certain Dual Citizens:
Although not certain, IRS is currently reviewing another disclosure program or new set of procedures for dual citizens of US who may owe no taxes to the IRS to come into FBAR compliance.
Quick Fact About IRS Voluntary Disclosure Program For Offshore Bank Accounts:
1) $3,400,000,00 - IRS Taxes collected so far under the 2009 offshore bank account program.
2) $1,000,000,000 - IRS Taxes collected so far under the 2011 offshore bank account program to date. This amount is expected to double as the IRS completes its investigation.
3) 33,000 - Number of IRS Taxpayers who voluntarily disclosed offshore bank accounts under the 2009 and 2011 programs.
If you have an offshore bank account, and would like to learn about your legal options, including a voluntary disclosure, contact us. All communications will be confidential and covered under the attorney client privilege.